Shinzo Abe returns as Japan's PM

Japan's new prime minister Shinzo Abe arrives at the parliament for the special diet session in Tokyo (AP)

Old-guard veteran Shinzo Abe has been voted back into office as prime minister of Japan and immediately named a new cabinet, ending three years of liberal administrations and restoring power to his conservative, pro-big-business party that has run the country for most of the post-Second World War era.

Abe, whose nationalist positions have in the past angered Japan's neighbours, is the country's seventh prime minister in just over six years. He was also prime minister in 2006-2007 before resigning for health reasons that he says are no longer an issue.

The outspoken and often hawkish leader has promised to restore growth to an economy that has been struggling for 20 years. His new administration also faces souring relations with China and a complex debate over whether resource-poor Japan should wean itself off nuclear energy after last year's earthquake and tsunami caused a meltdown at an atomic power plant.

On top of that, he will have to win over a public that gave his party a lukewarm mandate in elections on December 16, along with keeping at bay a still-powerful opposition in parliament. Though his party and its Buddhist-backed coalition partner is the biggest bloc in the more influential lower house, Abe actually came up short in the first round of voting in the upper house, then won in a runoff.

Capitalising on voter discontent with the left-leaning Democratic Party of Japan, Abe has vowed to shore up the economy, deal with a swelling national debt and come up with a fresh recovery plan following last year's tsunami disaster, which set off the worst nuclear crisis since Chernobyl.

"Disaster reconstruction and economic recovery are our first and foremost tasks," new chief cabinet secretary Yoshihide Suga said in announcing what he called a "crisis breakthrough cabinet".

In foreign policy, Abe has stressed his desire to make Japan a bigger player on the world stage, a stance that has resonated with many voters who are concerned that their nation is taking a back seat economically and diplomatically to China.

He has said he will support a reinterpretation of Japan's pacifist post-war constitution to loosen the reins on the military, stand up to Beijing over a continuing territorial dispute and strengthen Tokyo's security alliance with Washington. Beijing has already warned him to tread carefully, and will be watching closely to see if he tones down his positions now that he is in office.

Abe led the Liberal Democratic Party to victory in nationwide elections this month to cement his second term as Japan's leader.

"I feel as fresh as the clear sky today," Abe told reporters before the parliamentary vote, adding that he wanted to get right down to business. His new Cabinet will feature another former prime minister, Taro Aso, as finance minister.